Diane Cobb, 56, and Paul Sloane Davis, 74, have been charged with fifteen counts of conspiracy, mail fraud, and wire fraud, and Diane Cobb has also been charged with five counts of aggravated identity theft.
Cobb and Davis were indicted by a federal grand jury on October 31, 2013. According to the Indictment, Cobb and Davis operated a financial services company in Marin County known as DM Financial.
Through DM Financial, Cobb and Davis offered investors the opportunity to fund purported short-term “bridge loans” to borrowers who, according to Cobb and Davis, needed short-term financing for residential real estate transactions. Cobb and Davis allegedly fraudulently provided to these investors, among other things, the identity of the purported borrower, a promissory note reflecting the amount and terms of the loan, and a deed of trust securing the loan to the borrower’s real property. Based upon these documents and other representations made by Cobb and Davis, the investors believed that Cobb and Davis were directing their funds into secured loans with borrowers.
The Indictment further alleges that, in fact, the purported borrowers received none of the investors’ money, and did not even know that their identities were being used to solicit investments. Instead, Cobb and Davis allegedly diverted substantially all the money—approximately $2.4 million—for their own personal use or to make interest payments to prior investors to keep them from discovering the true nature of the scheme.
Cobb and Davis were arrested on November 13, 2013, in Las Vegas, Nevada. They both made their initial appearances in federal court in Las Vegas on that day, when they were released on bond. Bail was set at $100,000. Cobb and Davis are next scheduled to appear on November 26, 2013, at 9:30 a.m., for their initial appearance in the Northern District of California, before The Honorable Jacqueline Scott Corley, United States Magistrate Court Judge, in San Francisco.
The maximum statutory penalty for each count of mail fraud, wire fraud, and conspiracy, in violation of Title 18, United States Code, Sections 1341, 1343, and 1349, respectively, is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. The statutory penalty for each count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A(a)(1), is two years’ imprisonment. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
United States Attorney Melinda Haag announced the charges.
Thomas Stevens and Benjamin Kingsley are the Assistant United States Attorneys who are prosecuting the case, with the assistance of Phillip Villanueva and Rayneisha Booth. The prosecution is the result of a one year investigation by the Federal Bureau of Investigation.